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Top 10 Ways for Tax Reduction for Small Businesses and Start-ups




Running a small business or a startup company is not easy because you need to take care of so many things. When it comes to starting a company as a business owner you may be liable to its liabilities so it is important to know about each and every possible detail about starting a company.
If you are planning to start a business then you must consider Malta as one of the preferred locations to run a business. The location is superb for starting a business or running a full-fledged business as well. Malta offers a number of tax benefits for the business owners and is geographically perfect to run a business across the world.

As an owner of a small business or a start-up, you already have a lot to think about. The last thing you want to do when the tax season arrives is to sit all day and check out receipts and do the paperwork to file the tax return. Moreover, any mistake in filling the tax return may even put you in legal troubles. Taxation laws in Malta may seem complex and so are such laws anywhere across the world. That is why it is always best to hire a professional accountant to file your taxes.  Malta has its own taxation process, and therefore, hiring a professional Malta advisory services provider is always a great option to consider.

While hiring a tax advisory professional is a great option as an owner of a small business or a startup, you must take measures to reduce the tax liability on your end as well. We have jotted the 10 most effective ways that can help your small business or startup company in tax reduction.

When it comes to startups and small businesses, salary and wages are something you need to be very aware of. You should know how much money is being spent on salary, wages, bonuses, & increments. These are deductible business expenses for small businesses and startups. Furthermore, specific filing requirements are present for wages, and it would be a good idea to hire a professional payroll administrator.

  • Stay Updated with the Tax Laws

It is always important to hire a tax advisor as he is familiar with the tax laws. However, it is also important to have knowledge about the tax laws on your own end too. Some tax laws might be favorable however there are some that are not. To help your small business grow and understand what is good for your startup company it is crucial to understand the tax laws. You must be aware of the latest updates in the tax laws and make decisions that can help your business grow and prepare the right tax returns. Hiring a tax advisory is always a good option as they are familiar with the tax laws and updates. It is also very crucial to stay in touch with professionals to get a better insight into your business.

  • Register your Startup or Small Business as a Limited Liability Company (LLC)

Many times startups and small business commit the mistake of underestimating their business potential and fail to understand the importance of registering as a limited liability company. There are a number of business owners who can get huge benefits by registering a company as LLC. It will basically help in eliminating self-employment taxes, provide tax benefits which are only allowed for companies and most importantly, allow for the owner’s liability in case of default to be limited to the unpaid share capital, and not be unlimited as in the case of a self-employed business.

  • If you’re Work from Home Ask for Home Office Deduction

If you do not own an office and work from home then also you can deduct the taxes for your startup and small business but it is important to meet up tax regulations in your state. The office space from your house must be properly used for work purpose. For example firstly, if you use the same space for sleeping, talking and eating then it won’t qualify. Secondly, the homes office must be your prime place where you conduct most of your business possibly every day.

  • Keep your Records in Place

As a startup company or even a small business owner, it is important to keep a track of all the bills and receipts. However, it is also important to keep those records in one place as you would need them during the payment of the taxes. The last thing you would want to do is look for books, receipts, and records for the preparation of the taxes. It is not only time consuming but is very frustrating to look for things when you should be focusing on your business.
Getting organized and staying organized by keeping a track of the records, payments, bills, and transactions are important for tax preparation. Proper documentation and records ensure that you make the most from tax incentives. Since you have got all the records in place you can avoid tax penalties.

  • Hire Freelance Individuals Rather than Full-Time Employees

The best part of running a small business or starting a company is that you have the choice of limiting your staff. So, instead of hiring full-time employees it is always good for startup and small businesses to hire individuals who can work for you when required. Therefore, during that time of the year when you do not need a particular group of staff, you do not have to fire them or pay them for nothing.

In addition to that, freelancers are also not liable to employee benefits schemes like medical insurance, vacation, increments, etc.

  • Check the Deductible Expenses the Business Qualifies for

Every business no matter how big or small looks for tax advantages that they can make use of to reduce their taxes. However, when it comes to small business and startup company tax reduction is more crucial since every penny counts to be able to re-invest in the business to grow it. Make sure to know and understand all of the deductible expenses that your business is directly allowed and do not forget to include them while filling your tax return.

  • File your Taxes on Time

The most important thing to do is to file the taxes on time. No matter how clear you are about the finances of your business, if you fail to file the taxes on the time you will have to pay late filing penalties and interest on late payment of tax. For small businesses and startups tax penalties can be really heavy on their growth. So make sure to file the taxes on time.

  • Choose which Charities to donate to

Not all donations are allowable as tax deductions. Therefore, when you feel like giving part of your hard earned money to charity, try and choose registered Non-Governmental Organisations which are allowed for tax deductions, thus benefitting your business as well as the charity organization.

  • Hire a Tax Professional or a Tax Advisor

Even if you think that you do not really need a tax professional for your small business it is always good to hire a professional while filing for taxes. A good tax professional with proper qualifications and experience knows exactly how to deal with your business finances. They can also help and guide you with regards to tax benefits and deductions. Moreover, you do not have to worry about deadlines as your advisor will take care of such.

At ZMS Consultancy we constantly work to help clients receive the best accountancy services. Our Malta accountants will help you keep your books in order and file all required returns and statements in good time and in line with relevant laws and regulations. They will also be able to advise you on any issue you may have in running your business.